Nebraska-based Allo Communications, a competitive provider that serves urban and rural areas, has seen strong growth over the 20 years since its founding. Telecompetitor talked to Allo CEO Brad Moline about how the company achieved this.
Moline, who previously founded competitive provider Birch Telecom, started Allo with the aim of providing businesses with higher quality and more consistent telecom services than they were getting from the incumbent.
“Three of us opened the doors by leasing parts of the network from the incumbent, but very quickly we knew that we needed to build our own network,” said Moline.
By 2005, Allo lit up its first fiber network in Scott’s Bluff, Nebraska. Almost, two decades later, the company announced plans to bring symmetrical 10 Gbps fiber-based services to three Eastern Nebraska communities.
In the meantime, Allo has grown to more than 1000 employees who provide a wealth of services to business, government and residential customers via a variety of active, passive and XGS-PON fiber-to-the-premises (FTTP) networks.
Those networks span 37 cities that are home to more than one million people across three states: Nebraska, Colorado and Arizona. Allo also notably provides services in Lincoln, Nebraska, which is one of the 100 largest cities in the U.S.
“We’ve done a ubiquitous build there and I contend that Lincoln is the most connected city in the country,” said Moline.
Investing and Growing
Around the time Allo got started, “I owned probably 75% of the company . . . and we did the initial phase out of my back pocket,” said Moline. “We just started adding family and friends and then people from different communities invested.”
More communities took an interest and began investing in Allo until the company outgrew that funding method and began working with some smaller, regional investment funds, he added.
After that, Allo sold 80% of its business to Nelnet, a publicly owned student loan company that was looking to diversify its portfolio and utilize some fiber in the Lincoln market and in eastern Nebraska.
“We kept on growing and Nelnet sold down to below fifty-percent and we added a group called SDC Capital Partners LLC out of New York about three years ago,” said Moline. “It’s such a capital-intensive industry that you just go through evolutions of investors.”
Today, Nelnet and SDC own about “40 percent plus” of the company, and together with Allo, the three companies form “a collection of business people that care about common results,” said Moline.
“I just try to run a perpetual business and as investors want to come in, or go out, or invest more, we can look at it and accommodate them,” he added. “It isn’t just them investing, there are also debt arrangements and the like, so you end up with a group of stakeholders that are extremely valuable to your long-term growth.”
Today Allo sees its biggest opportunity in providing communication and entertainment options for underserved communities. To Allo, underserved means Tier 2 and 3 cities and regions in its three-state footprint, said Moline.
“We always offer enormous amounts of bandwidth and great services,” said Moline. “We generally get greater than 50 percent market share in business, government and residential.”
He added that “Quite often people think it’s a quick project where we are going to install some bandwidth and then flip it to someone else. We have had four core values since day one:
“To be exceptional, honest, hassle-free, and local, because that’s the gap we saw that the incumbents didn’t provide. We just offer everything across those core values, but with a 30-, 40- or 50-year viewpoint, not a short-term ownership and flip.”
Grants and Awards
In addition to having access to its investors’ capital, Allo is looking at, and winning, government grants. The company won $11 million of the $61 million the state of Nebraska awarded to broadband service providers in the fall of 2022 to bring broadband to Nebraskans most in need of it.
Allo was one of the two biggest winners of those awards.
“We have built a reputation of doing what we say we are going to do. It’s kind of old-fashioned, but I think the reason we have won some of this funding for projects is because people can count on us doing it right,” said Moline.
“It doesn’t hurt that we also have some of our own capital behind us.”
Moline also expects to be involved in the $42.5 billion BEAD rural broadband funding program – and he sees opportunities beyond simply winning funding.
For example, Allo’s large construction force of 700 employees could help BEAD winners build networks, or the company could offer services to grant winners that need a full service platform, he explained.
“There are a lot of ways to play in BEAD,” said Moline.